A VAT-registered car dealer allows a customer £6,500 (including VAT at the rate of 21%) for his used car as a trade-in against a new car, the retail price of which is £15,000 (including VAT at the rate of 21%).
As a result of this transaction, the car dealer is liable to pay VAT of ….
Select ONE answer:
- £1,475.21
- £1,785.00
- £3,150.00
- None of the above.
Show your workings to arrive at your answer, and explain and justify your reasons:
……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………
This multiple-choice question is suitable for Accounting KS5 classes.
The answer is 1
Net sale incl. VAT = £15,000 – £6,500 = £8,500
Net sale excl. VAT: £8,500/ 121 * 100 = £7,024.79
VAT on net sale = £7,024.79 * 21% = £1,475.21
- Correct
- Incorrect
- Incorrect
- Incorrect
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